Alex Masski, the founder and former CEO of Celsius Network, which recently went bankrupt, received a 12-year prison sentence on Thursday after admitting to securities and product fraud back in December.
This sentence was handed down by US District Judge John Cortre in Manhattan and marks one of the most prolonged criminal cases linked to the 2022 cryptocurrency market crash.
Meanwhile, Sam Bankman-Fried, the head of the FTX Exchange, has been sentenced to 25 years in prison for fraud-related crimes.
Federal prosecutors argued that the 59-year-old Masski misled customers regarding the safety of Celsius and inflated the value of Celsius’s token. They requested a prison term of at least 20 years, stating he reaped more than $48 million from his actions and caused tremendous financial harm to many, labeling this case as deserving of “just punishment.”
“Tokenization and the use of digital assets are significant, but they don’t give anyone a license to deceive,” said Manhattan attorney Jay Clayton in a statement.
Masski expressed a desire for a shorter sentence, mentioning he felt regret and wanted to do right by his family and former clients of Celsius. His sentencing also includes three years of supervised release and the forfeiture of $48.4 million.
Masski’s lawyer did not provide immediate comments following the ruling.
Founded in 2017 and based in Hoboken, New Jersey, Celsius filed for Chapter 11 bankruptcy in July 2022 when customers hurried to withdraw their funds amid falling cryptocurrency prices.
Masski, originally from Ukraine, relocated to Israel with his family before eventually moving to New York after a visit in 1988.
Cryptocurrency lenders typically aim to offer easy loan access and high interest rates to depositors while lending to institutional investors, hoping to profit from the differences.
Celsius had been providing interest rates as high as 17% on certain deposits but reported a staggering $1.19 billion deficit when it sought bankruptcy protection.
In addition to his criminal sentence, Masski is facing civil lawsuits from the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Trade Commission, and New York Attorney General Letitia James.
